Real Estate Information Archive

Starting Monday, December 13, 2010, Fannie Mae is changing its mortgage lending guidelines that can impact home buyers seeking new home loans in Arizona.

For some mortgage applicants in Maricopa & Pinal counties the loan approval process will simplify. For others, it will toughen. How you’ll be affected personally will depend on your credit profile and your loan characteristics.

Among the biggest changes from Fannie Mae is a new set of guidelines for gift funds. When the new rules roll out, accepting cash gifts for a down payment will be easier.

The top three changes are:

1. Buyers of owner-occupied, 1-unit properties (i.e. single-family homes, condos, townhomes) no longer need to contribute at least 5% of the down payment contribution. Down payments on homes meeting the above criteria can be comprised of 100% gifted and/or granted funds.  Buyers of second homes and multi-unit properties, however, are not exempt.
2. Debt with less than 10 payments remaining may no longer be waived in debt-to-income ratio calculations.
3. Debt lacking a monthly payment on credit must be assigned a payment equal to 5% of the outstanding balance.

Both #2 and #3 will increase the number of loan denials in 2011 and/or significantly reduce how large of a loan a buyer may qualify for.

And, lastly, Fannie Mae noted (as a reminder) that homeowners with a foreclosure on record will have to wait 7 years before being eligible to qualify for a new conforming mortgage.

Loan applications taken prior to December 13, 2010 are exempt from the new rules.  SO talk to your loan officer and plan accordingly.  If you don’t have a Loan Officer you consider to be a friend, call or email me at ShaneTheRealtor@Gmail.com  I answer all my own calls and emails.

Fannie Mae’s complete guideline changes are available online at http://efanniemae.com.

Arizona has one of the hardest hit housing markets in the US today. We also saw the most staggering price increases in a relatively short amount of time that set new records in price and equity escalation.

Many economists speculate on a housing recovery and when or if it's coming. If you look at the rise and decline we have seen in Maricopa and Pinal counties over the past decade a picture emerges, we currently have very low prices and a great supply of inventory but they are not going to get cheaper and believe it or not, they are being bought up. The other great news is that this has helped keep interest rates low.

This is the perfect storm of a buyers market. The time to buy in that overpriced neighborhood with the best schools are now not just a dream for you, it's in fact very possible.Moving to that retirement or first home has never been wiser. 1031 exchanges and cash buyers despite reports are abundant.

For those of you who can't sell but are instead riding the storm out, rehabbing your current home for your own enjoyment and future sales or appraisal opportunities has never been a smarter move. Contractors and materials are very reasonably priced. Get that new kitchen you always wanted or deck out that master bathroom, get the solar panels on your roof and take advantage of the almost ridiculous rebates. It is an investment that you will be glad you did when Realtors again start knocking on your door to ask you if your home is for sale.

If you have a housing question that you want answered feel free to drop me a note.

Shane The Realtor

Many of us have heard that thanks to the insurance "reform" that President Obama has initiated there is now a 3.8% sales tax on all home sales to help foot the new federal expense.

This is not entirely true. The transaction tax is for "high income" home sellers or business sellers alike who exceed the already in place threshold on profits over and above the capital gains threshold, most of the high earners make up a five percent margin, and not all will be taxed.

In home sales if you are single you can sell your home every two years and keep up to 250K, 500K if you are high earner (200K a year or more) single or a married couple, you sell your property and If you exceed that capital gains profit margin you may be taxed at the 3.8%.

Question: Were you lucky enough NOT to buy your current home in an overpriced market?  If so, high home equity levels are on your side.

Could you enjoy living in your present neighborhood for the next few years? Whatever your home needs, it can be updated for pennies on the dollar as compared to moving.

If you answered “Yes!” to these questions you have just discovered two great reasons that now is your best time to remodel. 

Here are six more:

1. Let’s Talk Cheap Money
   For many years banks enthusiastically supported the risky dreams of big-boom borrowers but that pond has dried up.  Standards are tight. They are no longer ready to go with the flow. Lenders need to offset bad loans with good ones.  Interest rates have been moving down (also good news) but you must have three things before they will show you the money:
         - A good credit rating
         - At least 20 percent equity in your home
         - Proof of income.
   Once again, if you can answer “Yes!” to these questions then now is your best time to remodel.
2. Contractors Are Available
   When everyone was keeping up with the Joneses, contractors could afford to choose only big-budget projects.  Now quality tradesmen find that they must dedicate some of their schedule to smaller projects. This is good news for you.
3. Time Is On Your Side
   In booming building markets, you wait in line.  Projects can be delayed for months ... or a year or more – as builders are overbooked.  Today`s market means you can get your work done fast.  We all know that time is money.  Once again now is your best time.
4. Building Material Prices are Dropping
   Declining demand means declining prices for construction materials. Another boost is that with inventory availability, your job is not held up by back-orders. As soon as you have booked your time or a contractor's you can move forward quickly.  Turnaround is half what it has been in recent years. Watch building suppliers and you can take advantage of great specials. 
5. Today`s Real Estate Market is Looking for Resale Value
   More than ever value for the housing dollar is important to buyers.  Is your home functional, economical to maintain and, above all, liveable? Once these questions are answered three major concerns face homeowners today
        - Building for the neighborhood
        - Mortgage rates
        - Employment
   In many cases upgrading existing space is a better option than building new.  The cost of building from the ground up can grow exponentially, with all the variables, cost inputs and changing financial circumstances.  Having the framework, electricity and plumbing already in place means that the most expensive aspects of your project are already at hand. An attic conversion, basement remodel or mid-range bath or kitchen makeover can give the best return on your investment. Don’t overbuild.  Think maintenance and functionality first.   
6. Remodel to Improve Maintenance. It Makes You Money.
   Houses age no matter what the market is doing.  Roofs need replaced, plumbing repaired and worn out appliances fixed or upgraded. Remodeling now for energy efficiency, water and resource conservation with the use of sustainable or recycle products means money in your pocket and a healthier environment.  Consistent home maintenance raises the value of your home, but even better it makes your home a comfortable place to live.

If you are a homeowner who has decided to stay where you are, consider remodeling.  You will be improving your home investment and you will enjoy living there even more. 

Remodel now. It`s your best time to go for it!

I was fortunate enough to Golf Red Mountian Ranch today. It is home to one of the only 12 Pete Dye designed courses in the country. It kicked my butt, but it was a blast.

There are beautiful homes out there and as a Realtor I just instictively have to know how much it will cost for me or my clients to live in a place. Hey it's my job to find this stuff out, right? My research showed

You can get in there in an older home say late 1980s for the high two hundreds and low threes. The homes out there can get up to a million, I think the really nice ones were four hundred to 800K but very nice.

If you are looking for a place like this to move to let me know, I may have just seen your next home today!

Bathroom remodels are in demand more than before. While kitchens are still high on the interest list for buyers and homeowners, the National Association of Home Builders (NAHB) is reporting that remodeler survey respondents say that a bathroom remodel was one of their most common projects during the first six months of 2010--as much as 61 percent of their remodels were done on bathrooms.

In previous years kitchen remodeling was reported as the most common activity by more than 70%. Most remodelers report they are continuing to struggle, however they expect the rest of 2010 to be a period of stabilization for remodeling, with the first stages of recovery emerging by the end of the year, followed by a robust recovery in early 2011.

No matter which room you're going to remodel, doing your homework and knowing exactly what you want will save you not only money but also potential headaches. Things like checking references and visiting some of the recently remodeled projects are a great way to determine if the company you plant to hire will be suitable for your needs. Neglecting to do this could mean that you bring in the wrong company and, worst case scenario, a simple job turns into months of work and extra expenses.

Here are a few things to consider when remodeling. Some experts say, if you're planning to stay in the home for five years, remodel it how you like. In other words, put in the countertops that make you happy--even if they're not the most popular. Use the color paint that expresses your inner feelings. However, I always say, remember there's a balance. If you remodel and create something that is so unusual, you may run the risk of it not appealing to the masses and therefore you will have to find the few that are searching for that particular look. That doesn't mean you shouldn't design and decorate based on your likes, it's just a matter of considering how the remodel will impact you when it comes time to sell the home and then choosing the best option for you for both short and long term.

Bathroom remodels are in demand more than before. While kitchens are still high on the interest list for buyers and homeowners, the National Association of Home Builders (NAHB) is reporting that remodeler survey respondents say that a bathroom remodel was one of their most common projects during the first six months of 2010--as much as 61 percent of their remodels were done on bathrooms.

In previous years kitchen remodeling was reported as the most common activity by more than 70%. Most remodelers report they are continuing to struggle, however they expect the rest of 2010 to be a period of stabilization for remodeling, with the first stages of recovery emerging by the end of the year, followed by a robust recovery in early 2011.

No matter which room you're going to remodel, doing your homework and knowing exactly what you want will save you not only money but also potential headaches. Things like checking references and visiting some of the recently remodeled projects are a great way to determine if the company you plant to hire will be suitable for your needs. Neglecting to do this could mean that you bring in the wrong company and, worst case scenario, a simple job turns into months of work and extra expenses.

Here are a few things to consider when remodeling. Some experts say, if you're planning to stay in the home for five years, remodel it how you like. In other words, put in the countertops that make you happy--even if they're not the most popular. Use the color paint that expresses your inner feelings. However, I always say, remember there's a balance. If you remodel and create something that is so unusual, you may run the risk of it not appealing to the masses and therefore you will have to find the few that are searching for that particular look. That doesn't mean you shouldn't design and decorate based on your likes, it's just a matter of considering how the remodel will impact you when it comes time to sell the home and then choosing the best option for you for both short and long term.

Will there be a housing shortage? 672,000 new homes were started in April 2010, an annualized rate and less than half the long term run rate needed to meet the nation's natural expected population growth.

The shortfall has been masked by a weak economy and that has put a damper on home buying. Once the job market rebounds, however, people will look to have their own homes again. This pent up demand could get unleashed on unprepared markets, causing shortages and rising local prices.

As many as seven million homes are vacant, but not for sale according to the Census Bureau which should provide some cushion to offset demand. That inventory number, however, can can be deceiving for two reasons: People my not want to live in hard-hit areas where the houses are, many of them are beyond repair and in areas many would not stop a car in, let alone live.

Many smaller Home-builders usually ready and able to help absorb additional demand are unable to obtain construction loans or lost their financing in mid project. Hard times have persuaded builders to postpone purchases of land they could prep for future development. That will make it much longer for them to gear up production once the housing market improves.

The housing tax credit to consumers is expiring June 30th 2010. The National Association of Realtors is asking congress to extend the timelines to close deals and still allow ready and willing buyers time needed to close escrow and qualify for the credit.

The problem is that the banks and the government are involved. Many transactions are foreclosure, short or regular sales all of which take longer now because of the new Reg Z & RESPA laws, getting a loan from origination to closing is taking A LOT longer. It's not going to hurt anyone to extend the timeline for already qualified buyers.

The HAMP program is a dismal failure. 116,000 loans have been modified out of the millions of applicants who asked for help. I read an article from NPR that recalled the great depression era solution. President Roosevelt created a program called HOLC or Home Owners Loan Corporation. In essence they purchased loans in distress from banks and negotiated new affordable mortgages with homeowners. President Obama has misunderstood the calculus faced by homeowners facing foreclosure, homeowners upside down in their homes have little incentive to save it even with a lower payment. modifications that reduce principal are far more successful than those that just lower the interest rate, the extend and pretend mantra that lenders use in today's mod's often include missed payments, late fees, service charges racking up an even higher principal balance.

In contrast a homeowner with equity to protect will find a way to make those monthly payments. The time for the government to step in is now. The servicers fear that if they lower peoples principal balance, more and more people will stop paying and wait for an offer to be given to them. Many servicers also will not sell those notes at least not at a realistic price so how is the HOLC program going to work? Eminent domain, existing laws allow the purchase of property interests other than the outright ownership of land. If the government could buy these assets either by voluntary sale or by eminent domain for 30 to 50 cents on the dollar there would be ample room to reduce principal balance to make the mortgages more affordable. The new HOLC program like the original could pick and choose the mortgages it buys, it should only be used for primary residences and it should refuse mortgages that homeowners can afford but choose not to pay.

The best part is President Obama could enact this with out any further input from Congress and a portion of the TARP funds (75 Billion) could easily finance such an operation. It should stem off the foreclosure crisis and more importantly, it will cause lenders fearing Eminent domain and losing assets at a deep discount to voluntarily reduce principal balances.